One of my board members recently sent me a
note that analogized the financial situation to the “Wile E Coyote Effect.”
You might remember the coyote running along
and not realizing that he has run off the cliff. He keeps running suspended magically by
denial. He stops, feels around his feet for the ground, and then
looks down to find the ground has disappeared beneath him.
As nonprofit leaders, here we stand. Some of us are stopped on the edge of the
cliff, some have kept running and are suspended way out over the cliff, and
some of us are holding the anvil over our heads.
Our movement has received a lot of our 2008 budget that has the Economic Crisis hit us so late in the year it is difficult for us to act fairly project 2009 budgets. additionally there is a lot of confusing information circulating out there on how philanthropy changes in an economic crisis.
The big overall studies are misleading to people in the advocacy and campaign space. In 2001, the last big recession the crash was created in part by terrorism. The philanthropy and overall numbers of giving stayed neutral or went up because people gave more to 9/11 relief funds and they started going to church in huge numbers again. I would be interested in more studies that tease out the type of giving targeted at anything except advocacy and campaign related donations during previous economic downturns.
I'm focused on this because I believe it is really important to networks.The entire movement is not going to go out of business. Many of our groups are not go out of business. There may even be a growth in the number of groups that are formed as people with the skills get laid-off from larger groups, and there are very low barriers to starting groups, and the tools that they have in a new start up are identical to the ones that they had in the large institution. The movement may go the number of groups engaged in the advocacy. In places where there is money, we will see a swarming towards it. Some of that swarming will come from large institutions that shift message or mission or creep over to grab market share of the money that exist or the available people who are laid off from these other institutions will set up new brands in the niche to compete for money.
Focused on the aggregate number because there will be a network effect associated with the economic downturn. Most managers can handle a reduction from 20 up to 40%. It is hard, but with focus on the books and asking everyone to contribute a manager teams really squeeze an organization on travel budgets, new purchases, staff layoffs, benefit reductions, meeting cost, new initiatives and cut program expansions. It is painful but it is manageable. just like the American banks were able to hold back money, reduce their exposure to risk, and cut costs.
The problem is that if everyone goes through this at the same time within a particular network you can create a network collapse which exacerbates the problem. if you are running a national campaign on park funding and you work with it coalition or network of thousands groups, or 100 groups. With each one contributing several hours of staff time per month to the campaign, how do you manage a reduction of 20 to 40% when you are not in charge of which resources stay and which ones go? how do you manage when you don't know which of the 40 people out of the hundreds that you work with, are not to be here next month for your big campaign?
These are the network effects of a downturn and the overall numbers are the numbers that matter when you're thinking about network planning.
There are going to be great opportunities for change in 2009. In the economic crisis will create opportunities and create problems. It will create these problems and opportunities for groups and for our networks.
On the network level, are we prepared to take advantages of the opportunities that will emerge for our advocacy networks because of the downturn? On the network level, do we have a plan to avoid the obstacles that this crisis will create?
My sense is that there is a lot of thinking around how to take advantage of the network opportunities but there is little planning or thinking around mitigating the network effects of the downturn.